Financial data for May has been released, and in addition to the still relatively weak demand for credit, the continuous decline in M1 growth rate due to financial "water squeezing" has also attracted market attention. Among them, the significant reduction in corporate demand deposits is the main drag, with a single-month decrease of over one trillion yuan. How long the impact of the tightening of banks' "manual interest supplementation" will last and whether it will lead to a large-scale increase in corporate early repayments have become a focus of market concern.
Bankers and securities analysts interviewed by Yicai Media believe that the cleanup of "manual interest supplementation" indeed has a significant impact on the diversion of corporate deposits. While deposits are being diverted from large banks to small and medium-sized banks, a considerable portion also flows into wealth management, fixed deposits, and finance companies, etc. The related impact may continue until June, bringing certain "liability shortage" pressure to some banks. However, regarding whether it will cause corporate early repayments, some institutional insiders have indicated that the main impact may be on some loans with a "revolving" nature in the early period, and the scale of the impact will not be very large.
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At the Lujiazui Forum on June 19, People's Bank of China Governor Pan Gongsheng delivered a key speech, in which he suggested that personal demand deposits and others need to be studied for inclusion in the M1 statistical scope to better reflect the true situation of money supply.
Corporate demand deposits are being diverted
The latest financial data shows that the M1 balance in May was 64.68 trillion yuan, a year-on-year decrease of 4.2%, and the growth rate was 2.8 percentage points lower than the previous month. In the previous four months, the year-on-year growth rate of M1 fell sequentially and rarely dropped to a negative value (-1.4%). The accelerated decline in May has attracted widespread attention in the market.
However, institutional insiders generally pointed out that under the influence of multiple factors, the economic significance of the M1 data in May has been greatly weakened. From a structural perspective, the reduction in corporate demand deposits is the main drag on the decline in M1 growth rate. In addition to the poor flow of funds from the residential end to the corporate end, the impact of regulating "funds revolving" arbitrage and the cleanup of "manual interest supplementation" is still continuing to emerge.
According to the comprehensive data from the central bank and institutional calculations, corporate deposits decreased by 800 billion yuan in May, an increase of 660.7 billion yuan year-on-year. Among them, corporate demand deposits decreased by more than 1 trillion yuan, an increase of more than 800 billion yuan year-on-year.
"The cleanup of 'manual interest supplementation' has weakened the mapping effect of M1 on real economic activities," said Lin Yingqi, a banking industry analyst at CICC. Considering that corporate demand deposits have entered a negative growth range in the second half of last year, the trend of slow capital flow may still be continuing.
Looking back at the data, it shows that in the first five months of this year, non-financial corporate demand deposits decreased by about 4 trillion yuan, while fixed deposits increased by 1.5 trillion yuan. Market analysis has previously pointed out that the trend of corporate demand deposits being diverted to fixed deposits, wealth management, and the bond market is obvious.
According to Wang Yifeng, a banking industry analyst at Everbright Securities, looking at the credit income and expenditure statement data, structural deposits are the main alternative products after the suspension of "manual interest supplementation." The data shows that in April and May, public structural deposits increased by 321.3 billion and 92.6 billion respectively (due to some term designs expiring at the end of the month or being underestimated), with the increase in April to May accounting for more than 60% of the year-to-date cumulative increase.According to data from CICC, in May, state-owned large banks saw a year-on-year decrease of 784.3 billion yuan in deposits, while small and medium-sized banks saw a year-on-year increase of 484 billion yuan in deposits, marking two consecutive months of "less increase in large banks, more increase in small banks." Lin Yingqi stated that this is mainly due to the re-attractiveness of deposit rates at small and medium-sized banks after large banks cleaned up "manual interest supplementation." During the same period, the outflow of deposits from large banks led to a year-on-year decline in lending to the interbank market, while lending by small and medium-sized banks rose year-on-year.
From the market understanding of the reporter, after the "manual interest supplementation" was halted in April, it is true that some enterprises have gradually converted their demand deposits into financial management products. In addition to the continuous increase in the scale of financial product preservation, Lin Yingqi believes that the continuous abundance of non-bank liquidity also proves this point. From the data, the spread between R007 and DR007 narrowed again, and the interest rates of certificates of deposit and medium-term notes continued to be inverted.
In addition, as the illegal behavior of "manual interest supplementation" is gradually standardized, some funds have entered the banking system through non-bank institutions such as financial companies, in the form of interbank funds, to obtain high interest rates, engage in empty rotation and arbitrage, and increase the cost of bank liabilities. However, relevant departments have noticed such chaos and may further standardize it in the future, and the market needs to be alert to the corresponding risks.
How long will the impact of the standardization of "manual interest supplementation" continue?
From the financial data, in addition to being affected by measures such as optimizing the accounting of the added value of the financial industry, the current credit demand from enterprises and residents is still weak, and both the incremental and stock ends are facing challenges.
In terms of stock, on the one hand, the market is worried that the disparity between new and existing mortgage loan interest rates will increase the demand for early repayment of loans; on the other hand, whether the rectification of "manual interest supplementation" will cause more enterprises to repay loans in advance, thereby further weakening the money creation ability, has also attracted more attention.
According to the reporter's understanding, with the strengthening of regulatory standards for "capital empty rotation" arbitrage, coupled with the continuous decline in deposit interest rates, some large enterprises have indeed repaid tens of billions of yuan in bank loans in advance. In the context of the rectification of "manual interest supplementation," more and more enterprises are using idle funds to pay for the purchase of goods from upstream and downstream enterprises, and the sources of funds include bank agreed deposits included in M1.
However, some institutional personnel told the reporter that the early repayment of loans by enterprises due to the rectification of "manual interest supplementation" is more affected by the comprehensive impact of preventing "capital empty rotation." Funds with arbitrage intentions in the early stage may increase the willingness to repay in advance, but the overall scale is limited.
Some local bank personnel told the reporter that after the suspension of manual interest supplementation, the deposits of a large bank in some provinces decreased by tens of billions of yuan in the next month, but mainly returned from one bank to several other banks, including small and medium-sized banks with relatively higher interest rates. Therefore, the overall impact on corporate interest income still needs to be analyzed, and in fact, there has not been a significant change in the money of enterprises.
Some authoritative market experts told the reporter that objectively, enterprises repaying loans with deposits will lead to a simultaneous decrease in deposits and loans, which is reflected in the statistical data as a synchronous decrease in money supply, social financing scale, and credit. However, apart from enterprises reducing some interest income and banks reducing some interest expenses, the real economic production and operation activities have not been substantially affected.Regarding the impact of the regulation of "manual interest supplementation" on corporate deposits, the aforementioned institutional source believes that it is expected to last until June, and after the second quarter, the power of corporate funds "disintermediation" will weaken. As the mid-year rush volume node approaches, there are also market concerns about the pressure of bank loan-deposit mismatch. In the context of "lack of liabilities," there may be a situation where the intensity of wealth management returning to the balance sheet exceeds expectations, even generating additional selling pressure and causing disturbances to the market.
However, Wang Yifeng believes that, from multiple dimensions such as the liquidity environment, loan distribution, and wealth management allocation behavior, the probability of a significant upward interest rate due to a reverse stampede is not high. "It is expected that the funding situation in June will not be significantly tightened, but attention should be paid to the subtle changes in the central bank's attitude," Wang Yifeng analyzed in his latest report.
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